Tom incorporates his sole proprietorship as Total Corporation and transfers its assets to Total in exchange for all 100 shares of Total stock and four $10,000 interest-bearing notes. The stock has a $125,000 FMV. The notes mature consecutively on the first four anniversaries of the incorporation date. The assets transferred are as follows:

Assets Adjusted Basis FMV

Cash $5,000 $5,000

Equipment $130,000

Minus: Accumulated depreciation (70,000) 60,000 90,000

Building $100,000

Minus: Accumulated depreciation (49,000) 51,000 40,000

Land 24,000 30,000

Total $140,000$165,000

Requirements:

a. What are the amounts and character of Tom’s recognized gains or losses?